Managing Business Ethics and Opportunity Costs

Economic profits differ from accounting profits. Accounting profits are usually defined as revenues minus costs, and those costs as fixed and variable. Economic profits enlist a third cost, opportunity costs. While these costs are difficult to determine with mathematical precision, they are nonetheless significant, especially for decision making in business. They reflect social costs and benefits, tensions between individual and corporate interests, and all internal and external considerations which enter into decision making in business. It is precisely within opportunity cost decision making that Primeaux and Stieber situate business ethics.     

Exploring the dynamics of industrial relations in US multinationals: evidence from the Republic of Ireland

While previous work has identified a shift in the host business system which facilitates multinational corporations in their quest to introduce non‐union approaches, little or no qualitative data have been brought to bear on this issue. This article presents case‐based evidence on the dynamics of this trend in Ireland, focusing specifically on management approaches to collective employee representation as well as providing an exposition of the patterns of trade union recognition and avoidance in evidence.     

The Cost Effectiveness of the UK's Sovereign Debt Portfolio*

This paper provides a recursive empirical analysis of the scope for cost minimization in public debt management when the debt manager faces a given short‐term interest rate dictated by monetary policy as well as risk and market impact constraints. It simulates the ‘real‐time’ interest costs of alternative portfolios for UK government debt between April 1985 and March 2000. These portfolios are constructed using forecasts of return spreads based on a recursive modelling procedure. While we find statistically significant evidence of predictability, the interest cost savings are quite small when portfolio shares are constrained to lie within historical bounds.     

The impact of HR practices on the performance of business units

This article examines the impact of HR practices and organisational commitment on the operating performance and profitability of business units. Using a predictive design with a sample of 50 autonomous business units within the same corporation, the article reveals that both organisational commitment and HR practices are significantly related to operational measures of performance, as well as operating expenses and pre‐tax profits.     

An Analysis of Changes in Board Structure during Corporate Governance Reforms

This study examines the evolution of company board structure during a period of corporate governance reform. Using data over a time period following the publication of the Cadbury Report (1992) we present evidence of an increase in the independence of UK boards, as measured by an increased willingness to employ independent non‐executive directors, and to separate the positions of the CEO and the Chairman of the Board. In examining the determinants of these changes, we find that boards change more readily in response to changes in managerial control, equity issuance and corporate performance than changes in the firm‐specific operating environment of companies.     

Technological powerhouse or diluted competence: Techniques for assessing mergers via patent analysis

On a daily basis, we are bombarded with the news of yet another mega–merger. The business press generally greets these announcements with breathless projections based on extrapolations of combined sales, earnings, and R&D spending, with little emphasis on whether the merged companies will be worth the sum of their parts. In this paper we examine patent analysis techniques for evaluating the technological strength of merger candidates, and explore the notion that the technological quality of the merged company may be diluted rather than enhanced. We will also use patent analysis methods for examining the market value of companies, to determine whether a merger target is over– or under–priced. We will explore all of these techniques within the context of a case study of the proposed merger between Glaxo–Wellcome and SmithKline Beecham, although the techniques can be readily applied to any merger within an R&D intensive industry.     

A note extending Grosskopf, Hayes, Taylor and Weber, “Anticipating the consequences of school reform: A new use of DEA”

The article cited in the current paper's title shows how to extend Data Envelopment Analysis (DEA) to evaluate future, as well as past and present, performance. This is accomplished by relaxing some of the constraints that reflect the presence of imposed regulations, and then re-computing the evaluations under these alternate conditions. We here extend this approach to account for “long-run” and “short-run” behaviors, and the related bodies of theory that play prominent roles in microeconomics.     

Small firm growth,access to capital markets and financial structure: Review of issues and an empirical investigation

This article investigates the financial structure of small firms with an emphasis on growth and access to capital markets. Neo-classical economic, life cycle, pecking order and agency theory perspectives are reviewed in order to formulate testable propositions concerning levels of long-term, short-term and total debt, and liquidity. Up-to-date financial data were collected from the U.K. Private+ database for a large sample comprising of both listed and unlisted small firms. Regression results indicate significant relationships between financial structure and profitability, asset structure, size, age and stock market flotation but not growth except when rapid and combined with lack of stock market flotation. Analysis of stock market flotation as an interactive dummy reveals major differences between listed and unlisted small firms. The results indicate that the variety of financial structures observed in practice may reflect rational trade-offs of various costs on the part of small firm owner-managers but that the over-reliance on internally available funds and the importance of collateral, in the case of unlisted small firms, are likely to be major constraints on economic growth.